Standard&Poor's Downgrades U.S. Credit

In an historic blow to U.S. prestige and finances,the Standard&Poor's rating agency has cut America's credit rating from AAA to AA+.Belgium and New Zealand are also rated AA+.France,Canada,Hong Kong and the U.K. remain rated AAA.The action may have a negative impact on everything from credit card rates to government programs as the U.S. may have to come up with higher interest payments on its already colossal debts.Because a downgrade of U.S. Treasury bonds is unprecedented,it isn't exactly clear just what will happen when business resumes Monday morning.
The situation is complicated by the fact that the two other ratings agencies,Moody's and Fitch,disagree with S&P and have maintained their AAA rating of U.S. bonds.In any event,all bets are off for consumers,government and financial markets alike as the world comes to terms with the S&P censure of what it deems as an inadequate response to the the U.S. budget deficit.
Americans may end up paying more for everything from auto loans to mortgages because of the downgrade.There may also be less money for other government needs as the U.S. struggles to pay more interest to its creditors-approximately 100 billion a year more,according to a JP Morgan Chase estimate.The impact may be a cut of U.S. economic growth by about a half a percent.
At the World Golf Championships Bridgestone Invitational at the Firestone Golf Club near Akron,Ohio,Tiger Woods and Phil Mickelson failed to play adequately as they fell down the leader board in the second round on Friday.Americans Keegan Bradley,Rickie Fowler and Ryan Moore shared the lead with Australian Adam Scott at eight under par.
Next week,the market will be dealing with a Federal Reserve meeting,retail sales and consumer sentiment reports,on top of the S&P downgrade of U.S. bonds.Disney will report earnings on Tuesday,while JC Penney reports its earnings Friday.
The S&P futures were initially down 0.90 Friday evening,while bond index futures rose.The S&P futures later edged up to 0.50.The CME Group futures market reopens for business Sunday afternoon.